Marriage Allowance: Everything You Need to Know

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With effect from 2015/16 tax year, the Government introduced a Marriage Allowance that entitles eligible couples to a tax break. This amounts to £212 in 2015/16 tax year and £220 in 2016/17 tax year.

Although it is estimated that there are 4.2 million couples across the UK eligible for this tax break, only around 600,000 currently claim it. That means that there are almost 3.6 million couples that are missing out on a tax break that, with back-payments, is worth £432.

What is marriage allowance?

Marriage Tax Allowance is a government scheme designed to reward people who are married or in civil partnerships. It allows couples who are working and not using the full amount of their tax-free allowance to transfer up to 10% of it across to their partner, increasing their tax-free allowance and saving them money on income tax.

Specifically, if one of you earns under £11,000, you are entitled to transfer £1,100 (10%) of your personal allowance over to your partner. This takes their tax-free allowance up to £12,100, saving them £220 in 2016/17 tax year in basic-rate income tax payments and reducing the overall tax you pay as a couple.

Am I eligible for marriage allowance?

There are a few criteria that you need to meet to be eligible for marriage allowance:

  • You need to be married or in a civil partnership. (Unmarried couples with children, living together or engaged are not eligible.)
  • Both applicants must have been born after 6 April 1935. (If one or both of you were born before 1935 – you could be eligible for Married Couples Allowance – a better allowance for older married couples that is slowly being phased out.)
  • One of you needs to be a non-taxpayer, earning less than £11,000 a year.
  • The other needs to be a basic rate (20%) tax payer, earning less than £43,000 a year. (Couples with a higher rate taxpayer aren’t eligible for marriage allowance.)

If I’m a pensioner or live abroad, can I still apply?

Yes. As long as you receive a Personal Allowance, living abroad or collecting a pension makes no difference to your eligibility for marriage allowance.

Is there a deadline for applications?

No. You can apply at any point during the tax year. Once you’ve applied, your tax code will be changed and the money will be paid over the course of the rest of the year.

Plus, if you did not claim in the last tax year (2015/16) you’re allowed to backdate your claim – meaning that you’ll get last year and this year’s allowance combined at a rate of £432. You’re also entitled to backdate your claim for up to four years. (Although, it has only been running for two years at the moment.)

Once you’ve applied and been approved, your personal allowance carries over into all subsequent tax years until you inform HMRC that your circumstances have changed or you wish to cancel it.

Is it possible to lose money through marriage allowance?

Technically, yes. In very rare circumstances – such as when one partner earns a little under the tax-free allowance and the other a little over it – it can result in you paying more tax as a couple, and leave you worse off.

Luckily, you can check whether marriage allowance will save you money before applying at the HMRC website.

Do I need anything to apply?

Applying for marriage allowance is relatively simple: all you need to provide is both of your National Insurance numbers and proof of identity. This can be one of the following:

  • details from your P60
  • details from your most recent payslips
  • the last 4 digits of the account that your child benefit, tax credits or pension is paid into
  • the last 4 digits of an account that pays you interest

How do I apply?

To apply, simply visit www.gov.uk/marriage-allowance or call 0300 200 3300. From there, it’s a simple process of confirming all of your details and getting the allowance put in place (although it can take up to two months to take effect).

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